Commercial property purchasers could lose their right to fixtures allowances from April if they don’t comply with new tax rules, warns Crowe Clark Whitehill.
And the changes have implications for sales contracts too.
Rob Gunn, tax partner at the Midlands office of the national audit, tax and advisory firm, said: “Capital allowances on fixtures can provide significant tax benefits on commercial property acquisitions, but unwary purchasers could stand to lose these if they are not careful.
“The new rules will require vendors to notify HM Revenue & Customs about qualifying expenditure in order for the purchaser to be able to claim.”
The vendor and purchaser will also be required to make an election agreeing the value attributable to the fixtures, or take the matter to a tribunal.
“Failure to follow the new rules could deny allowances to the purchaser and to all future purchasers,” cautioned Mr Gunn.
“And it also means that from April it will no longer be appropriate for a sale contract to remain silent, or for purchasers to leave the capital allowances to be sorted out at a later date. Capital allowances will need to be considered as part of the purchase agreement.”
He added: “Vendors and purchasers need to get a firm understanding of these new rules to avoid hiccups.”
